The following chart provides a general guide to the taxable or exempt status of transactions, goods, and services sold and purchased by hotels and similar establishments. The taxable or exempt status of many of the
transactions, goods and services listed is dependent upon whether certain conditions are met. Therefore, explanation and comments have been added to provide guidance in specific situations where required.
Transaction/item or service sold or purchased
Taxable? Yes/No/Other
Additional comments/explanation, etc.
Hotel room revenue
Rent received for occupancy (transient room rental)
Yes If an occupant becomes a permanent
resident (after 90 days for state sales tax purposes and 180 days for NYC sales tax purposes), the entire period of occupancy becomes nontaxable. See page 14.
Guaranteed no-show revenue Yes Customer reserves room in advance.
Agreement between customer and hotel provides that customer receives the right to occupy the hotel room on the dates specified, whether the customer arrives to utilize the room or not. The room will not be released to another guest, whether the customer arrives or not.
Complimentary rooms Other: not taxable if
facts indicate that no consideration is truly being paid for the room(s)
Examples:
1. Complimentary rooms provided by hotel when a group rents a certain number of rooms are not considered to be separately taxable, but are considered part of the total taxable charge to the group.
2. Free rooms provided to
employees are not subject to tax provided that the value of the lodging is not considered wages for federal and state personal income tax purposes.
3. Free rooms provided to vendors, such as musicians,
photographers, contractors and other specified vendors who provide services to the hotel are subject to tax at the normal cost of the room.
Transaction/item or service sold or purchased Taxable? Yes/No/Other Additional comments/explanation, etc.
4. Free rooms provided to a person, such as, for example, a tour guide or travel
representative, where there is consideration, such as the bringing of future business to the hotel, are subject to tax at the normal cost of the room.
Early departure fees Yes Considered rent for occupancy.
Late departure fees Yes Considered rent for occupancy.
Cancellation fees No Amount charged when reservation is
cancelled; at no time does the customer have the right to occupy the room. Not considered rent for occupancy.
Attrition fees No Penalty charged because a group did
not fulfill their total event commitment; for example, a group event books 200 rooms, but, for various circumstances, ends up renting only 150 rooms for their event. The hotel charges the group a penalty for not renting the 50 remaining rooms that had been reserved.
Packages (example: golf, honeymoon, ski)
Yes Hotel charges one lump-sum fee for
room(s) for a specified number of nights and a variety of other goods and
services. Rooms rented to room remarketers,
such as Web based travel companies that reserve, arrange for, convey or furnish hotel occupancy to their
customers at an amount determined by the room remarketer
Yes See page 9 for information on room
remarketers.
Pet charges Yes Rent for occupancy whether or not
separately stated.
Pet clean-up fees Yes Rent for occupancy whether or not
separately stated.
Child care charges No Provided by hotel employees or by an
unrelated third party.
Rollaway bed charges Yes Taxable as rental of tangible personal
property or as rent for occupancy.
Refrigerator charges Yes Taxable as rental of tangible personal
property or as rent for occupancy.
Safe charges Yes Taxed as storage of tangible personal
property.
Transaction/item or service sold or purchased Taxable? Yes/No/Other Additional comments/explanation, etc.
Complimentary meals provided with room where hotel purchases food and prepares meals
No The hotel may owe use tax on any
otherwise taxable purchases of the components of the meal which are purchased for resale but not actually sold. See section 528.2 of the Sales and Use Tax Regulations for information on the exemption from sales tax for the sales of certain food and food products. Complimentary meals provided with
room where hotel purchases prepared food and meals from a leased
restaurant and/or outside vendor
No Hotel must pay tax on any of its
purchases of prepared food and meals from a restaurant or other outside vendor.
Complimentary beverage provided with room where the hotel purchases and serves the drinks
No Hotel may owe use tax on any
purchases that were made for resale for products that were not actually sold. Complimentary beverage provided with
room where the hotel pays an outside vendor to provide the beverages to its guests
No Hotel would owe tax on its purchases
from the outside vendor in this instance.
Complimentary bottled water provided in room
No Hotel would owe use tax on the bottled
water if it had purchased it tax exempt for resale.
Bottled water sold at retail Yes
Damage fees Yes Considered incidental part of rent for
occupancy or a charge for the maintenance/repair of the damaged property.
Food and beverage revenue
Restaurant food sales Yes
Beverage sales e.g.,liquor, wine, beer and softdrinks
Yes
Voluntary gratuities (whether fully distributed to servers or if
establishment retains a portion)
No
Mandatory separately stated gratuities that are fully distributed to servers, whether or not the mandatory gratuities are required under a union contract or other labor/management agreement
No Section 527.8(l) of the Sales and Use
Tax Regulations relating to gratuities provides that “Any charge, made to a customer, is taxable as a receipt from the sale of food or drink unless:
1. the charge is separately stated on the bill or invoice given to the customer; and
2. the charge is specifically designated as a gratuity, and 3. all such monies received are paid
over in total to employees.”
Transaction/item or service sold or purchased Taxable? Yes/No/Other Additional comments/explanation, etc.
Mandatory separately stated gratuities where the establishment retains a portion, whether or not the mandatory gratuities are required under a union contract or other labor/management agreement
Yes Note: For information on all types of
gratuities (i.e., voluntary and mandatory separately stated) see TSB-M-09(13)S,
Sales Tax on Gratuities and Service Charges and Tax Bulletin Gratuities and Service Charges (TB-ST-320).
Room service food and beverage Yes Separately stated delivery charges for
room service
Yes
Cover or minimum Yes
Corkage Yes Fee charged by restaurant or similar
establishment for serving wine or liquor brought in by customer; taxable as catering.
Cake cutting charges Yes Guest provides cake; taxable as
catering.
Ice carving charges Yes
Employee meals provided free of charge
Other: No, as long as the value of the meal does not constitute income to employee Employee meals provided for a charge
above cost, at cost or below cost
Yes
Complimentary food e.g., for customer satisfaction or for promotional purposes
No Hotel must pay use tax on any
otherwise taxable food and beverages that were purchased exempt for resale but not actually sold.
Meeting room revenue (no meals served)
No Meeting room must meet the definition
of a place of assembly as discussed on page 10.
Meeting room revenue (meals served) Yes Meeting room revenue (breaktime food served, e.g., coffee, water, candy and/or cookies)
Other: separately stated charge for meeting room not subject to tax; separately stated charge for food is subject to tax; if charge for room and food is not separately stated entire charge is taxable
Note: Break-time food does not include continental breakfast, buffet lunch, etc. See page 27 for further information of the provision of food and drink in conjunction with the rental of a meeting room.
Banquet room/convention charges which are separately stated and services which are performed by hotel employees or unrelated third party (services include, e.g., rigging,
electrical cabling, light setup fees, etc.)
Yes; charge by hotel to guest is part of
catering charge
If work is contracted for by hotel and performed by unrelated third party, charges to hotel are subject to tax; wages paid to employees of hotel for work performed for hotel are not taxable.
Transaction/item or service sold or purchased Taxable? Yes/No/Other Additional comments/explanation, etc.
Floral arrangements purchased to decorate banquet room
Yes
Cancellation fees: banquet rooms No Liquidated damages because an event
was cancelled. Damages may cover lost revenue not merely room rental, but from food that was ordered but thrown away, party decorations etc.
Attrition fees: banquet rooms No Fee charged because group did not
fulfill their total commitment (example: and event booked for 200 people but only 150 attended. Penalty is charged for 50 non-attendees.)
Other guests charges
Local telephone charges not billed on a per-call basis
Yes Part of rent for occupancy.
Local telephone charges billed on a per-call basis
Yes Sale of telephone service by hotel.
Intrastate long distance telephone charges billed on a per-call basis
Yes Sale of telephone service by hotel.
Interstate or international long distance telephone charges billed on a per-call basis
No
Internet access No
Television services, whether cable, non-cable, or satellite, in-room use of movies, videos or other forms of entertainment, including video games, pay-per-view movies, events, or other premium programming
Yes These services are subject to sales tax
as part of the charge for occupancy. See page 27.
Parking and related valet services Yes
Transportation charges Other: Certain
transportation charges provided by a livery service are subject to sales tax. For further information on this, see page 29 of this
publication.
Destination charges No Not enumerated as a taxable service.
Gift shop
Retail video rental Yes
Transaction/item or service sold or purchased Taxable? Yes/No/Other Additional comments/explanation, etc.
Retail food sales Other: There is a
general exemption for food, food products, beverages (including coffee, tea and cocoa), dietary foods, and health supplements sold for human consumption.
This food exemption is not applicable to candy, confections, soft drinks, alcoholic beverages, fruit drinks that contain less than 70% fruit juice, sandwiches, and heated foods. See Tax Bulletin Listings of Taxable and Exempt Foods and Beverages Sold by Food Stores and Similar Establishments (TB-ST-525). Nonprescription drugs, such as, for
example, aspirin, cold medicine, sinus medication, etc.
No See Publication 840, A Guide to Sales Tax For Drugstores and Pharmacies
and section 528.4 of the Sales and Use Tax Regulations for further information on the exemption from sales tax for drugs and medicines.
Retail candy Yes
Retail beer/wine sales Yes
Retail clothing Other: There is an
exemption from the state sales tax for clothing and footwear and items used to repair exempt clothing sold for less than $110.
The exemption for sales of clothing for less than $110 does not apply to any locally imposed sales tax unless the locality elected to provide the
exemption. For further information on localities that have elected to provide the exemption, see Publication 718-C,
Sales and Use Tax Rates on Clothing and Footwear.
Retail non-food sales (e.g., toothpaste, baby wipes, pens)
Yes
Newspapers and periodicals No
Miscellaneous fees (golf, tennis, swimming, etc.) purchased separately from hotel occupancy and optional (occupancy can be purchased separately without these fees)
Court usage No
Lessons No
Greens fees No
Commissions paid to hotel by outside providers
No
Transaction/item or service sold or purchased Taxable? Yes/No/Other Additional comments/explanation, etc.
Resort fees Other: If one lump
sum is paid and taxable and exempt items are not separately stated, entire charge is taxable. If taxable and exempt items are separately stated, tax is due only on the taxable goods and services e.g., rental of beach chairs, sale of bottled water
These are for a number of additional amenities provided by a resort, such as beach chairs, bottled water in the hotel room, access to fitness center,
newspaper delivery, shuttle service, etc.
Health spa and salon – purchased separately from hotel occupancy and optional (occupancy can be purchased separately without these fees)
Spa usage fees No Subject to local sales tax imposed in
New York City. Massage revenue-performed in spa,
guest room or off-site
No Subject to local sales tax imposed in
New York City.
Weight room fees No Subject to local sales tax imposed in
New York City.
Tanning booth No Subject to local sales tax imposed in
New York City.
Nutritional counseling No Subject to local sales tax imposed in
New York City.
Facials/barber/beauty services No Subject to local sales tax imposed in
New York City.
Miscellaneous sales
Telephone commissions received from pay phones
No
Prepaid telephone cards or prepaid calling services
Yes
Local and intrastate fax charges Yes Interstate and international fax charges No
Copy charges Yes However, copies sold through coin
operated photocopy machines at 50 cents or less are exempt from sales tax.
Equipment rental Yes
Transaction/item or service sold or purchased Taxable? Yes/No/Other Additional comments/explanation, etc.
Vending machine sales Yes Note: Food and drink sold for $1.50 or
less from vending machines, sales through regular vending machines at 10 cents or less and sales through bulk vending machines at 50 cents or less are exempt from sales tax. See
TSB-M-14(7)S, Increase in the
Exemption for Vending Machine Sales of Certain Food and Drink.
Vending machine commissions (vendor maintains the machine)
No
Commissions earned from room service meals provided by leased restaurant
No
Lease of real property No See page 30 for information on other
taxes that may be related to the leasing of real property.
Commission on automatic teller machine
No
Computer usage charges Yes Rental of tangible personal property
Shipping/mailing charges Yes, if it is a charge by vendor of taxable goods or services.
Miscellaneous purchases
Consulting services Provided that the
services are not enumerated as being subject to sales tax and the sale of tangible personal property is not involved – not taxable
General services Provided that the
services are not enumerated as being subject to sales tax and the sale of tangible personal property is not involved – not taxable
Janitorial services Yes
Transaction/item or service sold or purchased Taxable? Yes/No/Other Additional comments/explanation, etc.
Professional services Provided that the
services are not enumerated as being subject to sales tax and the sales of tangible personal property is not involved – not taxable
Landscaping services Yes
Cleaning supplies Yes
Pool maintenance Yes
Security service provided by security company or by off duty police officers
Yes
Salvage sales if tangible personal property such as furniture, kitchen equipment, etc.
Yes
Uniforms Other: There is an
exemption from the state sales tax for clothing and footwear and items used to repair exempt clothing sold for less than $110.
The exemption for sales of clothing for less than $110 does not apply to any locally imposed sales tax unless the locality elected to provide the
exemption. For information on localities that have elected to provide the
exemption see Publication 718-C, Sales and Use Tax Rates on Clothing and Footwear.
Cleaning of uniforms No
Maintenance contracts on hotel equipment
Yes
Freight charges Yes, if it is a charge by
vendor of taxable goods or services. Lease of tangible personal property for
hotel use
Yes
Employee drug tests No
Employee background tests Yes, if such tests constitute a taxable protective or detective service.
Hotel operation purchases
In-room amenities provided with guest room: e.g., shampoo, soap, toilet paper, laundry bag
Yes
In-room coffee provided at no charge to guest
No
In-room cookies provided at no charge to guest
No
Transaction/item or service sold or purchased Taxable? Yes/No/Other Additional comments/explanation, etc.
Newspapers provided at no charge to guest
No
Linens and towels Yes
Coffeemakers for in-room guests Yes Flowers (for hotel common areas,
display, hotel decorating
Yes
Operating supplies Yes
Food and beverage purchases
China, glassware and utensils Yes
Linens Yes
Operating supplies Yes
Disposable plates provided with purchased meals
No
Disposable napkins provided with purchased meals
Yes
Disposable napkins, plates, etc., provided with complimentary meals
Yes
Capital assets
Computer hardware Yes
Computer software designed
specifically for a single hotel and sold to that hotel
No
Prepackaged canned software Yes
Computer software designed
specifically for a single hotel which is delivered electronically
No
Prepackaged canned software that is delivered electronically
Yes
License to use computer software that is located outside of New York State
Yes
Furniture and fixtures for hotel Yes Kitchen machinery and equipment Yes
Office equipment for hotel Yes
Televisions, telephones and other electronics
Yes
Telephone switching equipment Other: Yes – unless it is used directly and predominantly in providing
telecommunication services for sale New construction of real property No
Repair of real property Yes
Installation of tangible personal property
Yes Not taxable if end result is a capital
improvement.
Transaction/item or service sold or purchased Taxable? Yes/No/Other Additional comments/explanation, etc.
Repair of tangible personal property Yes Fabrication of tangible personal
property
Yes
Purchase/Sale of entire business **For information on special rules and requirements in the case of the sale of an entire business see Publication 750,
A Guide to Sales Tax in New York State,and Part 537 of the New York State Sales and Use Tax Regulations Real property – and, buildings, other real property
No
Furniture, fixtures, equipment, and other tangible personal property
Yes